Among the casual dining chains,
BJ's Restaurants, Inc.
) is one of the few that has been expanding in an uncertain
economy. With the resurgence of consumer confidence, management
accelerated its unit openings in 2013. In the long run, the
company plans to open at least 425 outlets in the U.S.
The restaurateur recently unveiled a BJ's Restaurant &
Brewhouse outlet in San Jose, California, which marks the 11
of the company's targeted 17 openings in 2013. This is a clear
evidence of its strategy of expanding in the lucrative domestic
market. The restaurant, positioned in San Jose Market Center at
the juncture of Coleman Avenue and SR-87, marks the opening of
the second BJ's Restaurant & Brewhouse's unit in San Jose.
The 7,500 square feet unit can accommodate around 265 diners at a
California is the home-court of BJ's and it has plenty of
growth opportunities. The company currently operates a total of
130 restaurants across the U.S., of which 63 are located in
California. According to the National Restaurant Association, the
restaurant industry of California acts as a major catalyst to its
economic development. The state's restaurant industry is
projected to generate around $67.4 billion in revenues in
BJ's boasts a solid presence and tremendous customers'
fondness in San Jose. Thus, we believe the new unit will benefit
immensely from its strategic location and likely drive higher
sales. Moreover, an additional unit in the core California market
will further strengthen BJ's position in the region.
Although, the core California market has started reporting
improved same-store sales, it will still take some time to
perform at par with the other markets, which were less ruffled by
the recession. Further, higher sales tax and state income tax in
California along with higher gasoline prices compared to other
parts of the U.S. are taking a toll on the Zacks Rank #4 (Sell)
company's business. Further, the region is facing greater
competitive pressure as the gradual recovery of the economy has
resulted in several restaurant openings.
Apart from strengthening its presence in its existing
California and Texas markets, BJ's is now entering into other
potential markets. In Sep 2013, the company unveiled a BJ's
Restaurant & Brewhouse unit in Dayton, Ohio. With only four
restaurants, Ohio is a relatively newer market for the
Some other players in the restaurant industry which are
expected to perform well, going ahead, include
Burger King Worldwide, Inc.
Buffalo Wild Wings Inc.
Cracker Barrel Old Country Store, Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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